Keeping a Home When Disaster Strikes

Wildfires are burning out of control on the West Coast. The stock market is doing the Jitterbug. And it’s been 10 years since the Hurricane Katrina disaster. It may make you wonder what you would do in the event of a disaster, whether it’s caused by Mother Nature or financial distress.

Could you keep your home or rebuild? Where would you go for help?

Believe it or not, MetroTex REALTORS think about this kind of thing all the time. We see good people struggling to recover from the loss of a home due to fire or foreclosure, or trying to rebuild their finances after a job loss, medical bills, or divorce.

Because we’re experienced, REALTORS can offer a few words of advice to help you prepare for tough times and help you manage your affairs during them.

Call your lender.  Don’t wait until you’ve fallen behind on your mortgage to let your lender know about your situation. Ask for financial assistance or relief if needed. Lenders can offer to move you to an interest-only payment plan, or lower your interest rate for a short time. They can also rework the terms of your loan or forgive a portion of the principle balance in some cases. They are much more likely to work with you if you call them before there is an issue or if you can demonstrate that you are trying to make payments on your note a priority. If you can, pay the mortgage first before other bills.

Keep track of paperwork. You will need to prove to your lender that you’ve lost your job or come into other financial distress. Keep electronic copies of insurance policies, termination letters, divorce decrees, medical bills or deployment notice, along with copies of credit card statements, bank account statements and other bills so you can email them to the bank when needed. Keep these documents accessible and organized by using cloud storage service. Many of these services are offered for free or low cost.

Consider tapping other resources. If it’s possible to borrow money from family or friends while you’re getting back on your feet, it might help you stretch a few more months out. As a last resort, consider withdrawing from retirement accounts. You may have to pay taxes and penalties but if it helps you keep above water for a little longer, it might be worth it.

Try to avoid bankruptcy or foreclosure. While it may be tempting, abandoning a house or letting a house go into foreclosure can have a lasting impact on your ability to secure credit in the future. Credit problems can impact your ability to find another job and make it hard to find a rental property. Look into federal relief through various programs and weigh all of your options before you do anything drastic. Find information on current programs online through the Federal Housing Administration web site. Look for a HUD-approved counselor to guide you for free or very low cost. Housing counselors can contact lenders and other creditors on your behalf and negotiate payment plans.

Take advantage of programs offered to you.  Government programs, while they can be slow and involve a lot of red tape, can offer temporary housing, money for repairs and home replacement. Again, if you have documents stored online, you can demonstrate proof of ownership, insurance, income more quickly. Money may also be available for medical needs, moving, storage, transportation and funeral expenses. Ask about all of the services that are available and mention any special circumstances you may have.

Be persistent and ask around for help. If you find yourself in a situation that impacts your ability to keep your home, ask a MetroTex REALTOR for advice early on in the process. The earlier a professional is involved, the more options you have to keep your home or protect your credit.

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